Transocean, the owner and operator of the Deepwater Horizon rig at the center of last year's U.S. Gulf oil spill disaster, is paying $1.43 billion, or 26.50 crowns per Aker Drilling share, a 98.5 percent premium to Friday's close and 62 percent above its 30-day average price.

Transocean lost contracts in the second quarter and its profit fell as costs rose more quickly than the deepwater drilling industry could recover from the Gulf drilling ban following the Deepwater disaster.

The rig market off Norway, the world's eighth-largest oil exporter, has been tight in recent months, with not enough rigs to cope with high demand for drilling.

By Monday afternoon Transocean had acquired shares representing 8.7 percent of the capital in Aker Drilling, which together with pre-commitments by shareholders for the offer means it will control at least 67.6 percent of the company, above the threshold for completing the deal.

The offer, recommended by the board, beat off interest from other parties, Norway-based Aker said.

Tudor, Pickering, Holt & Co analyst Joe Hill said the deal was worth about 75 cents per share in earnings for Transocean once the new ships are built -- provided oil prices do not extend their recent selloff.

"The linchpin on that thesis is going to be the price of crude," he said, which needs to remain in the high $80s per barrel to keep the Norwegian market profitable.

Aker Drilling, spun off from Aker Solutions AKSO.OL earlier this year, operates two harsh-environment, ultra-deepwater semi-submersible rigs and is expected to take delivery in 2013 of two drillships under construction.

Carnegie analyst Frederik Lunde said Aker Drilling had long been seen as a likely bid target, and Transocean was taking advantage of recent weakness in its share price.

The stock closed on Friday at 13.35 crowns, down from a peak of 21.40 crowns on March 1, a few days after its initial listing earlier this year.

At 11 a.m. EDT the share was up 96.3 percent at 26.2 crowns, while Transocean shares in New York rose 3.8 percent to $57.73.

"Transocean is eager to renew its fleet, and looking at the value paid per rig in Aker Drilling, you basically get the rigs at a slight discount to the construction cost," Lunde said.

Transocean has been drilling wells off Norway since the early 1970s under various names and today owns five rigs off the Nordic country.

After the deal with Aker Drilling, the firm will own seven rigs and boost its market share of the rig market in the Nordic country to 25 percent, making it the biggest in the market.

Transocean was keen to acquire new, cutting-edge rigs to renew its aging fleet especially at a time when demand is growing for rigs that can drill in ultra-deepwater, at depths below 1,500 meters and in harsh environments like the Arctic.

TIGHT REGULATION

Lunde at Carnegie said the rig market in Norway was a tightly regulated niche.

"It is a lot more expensive and risky to build something for the Norwegian market, and there have only been built some four rigs in this market in the last 10 years," he said.

"So it was attractive for them to go for M&A, avoiding the construction risk as well."

The deal is backed by Aker Drilling's main shareholder Aker Capital A/S, a subsidiary of Aker ASA (AKER.OL), with 41 percent, and by other shareholders holding 19.5 percent, including funds managed by TPG-Axon Capital.

Oeyvind Eriksen, chief executive of Aker ASA, expects to spend the proceeds on other assets.

"It will further strengthen Aker's financial clout, and provide additional flexibility in our goal-oriented drive to further develop Aker's investment portfolios," he said.

Next In Deals

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FRANKFURT Labor unions have secured guarantees for a planned merger of Linde and U.S. rival Praxair , saying on Friday there would be no forced layoffs at Linde in Germany until Dec. 31, 2021 in case of a tie-up.

FRANKFURT/ZURICH Swiss aircraft manufacturer Pilatus Aircraft is considering listing its shares in an initial public offering next year which could value the firm at around 3 billion Swiss francs ($2.95 billion), according to two sources familiar with the matter.

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